Evergrow claims first tax credit transfer deal for solar project: ‘transferability will unlock billions’

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Financing firm Evergrow has claimed the first completed tax credit transaction using the new transferability provisions under the Inflation Reduction Act (IRA) in the US, for a solar PV plant in Connecticut.

The investment tax credit (ITC) covers a behind-the-meter PV project, with a capacity of under 1MW, at a commercial and industrial location in the state in New England, Evergrow CEO James Richards told PV Tech.

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It was developed by Davis Hill Development, the seller of the ITC, while the buyer has not been revealed.

Transferability was introduced as part of the IRA in order to widen the pool of potential tax equity investors, by making it easier to buy and sell ITCs and other tax credits, such as production tax credits (PTCs). It covers solar and other clean energy technologies, although energy storage is not eligible for a PTC.

Prior to this, these credits could only be utilised through complicated tax equity investment structures.

The US Treasury released guidelines on the transferability mechanism in June this year, including information on a government portal on which all clean energy projects wishing to make their accrued tax credits transferrable will need to be registered. That is expected to be fully launched by the Internal Revenue Service later this year, Richards said.

However, the new transaction method is still complex and a significant challenge for smaller-scale projects as Richards explained.

“Transaction costs are one of the biggest challenges. These financings are expensive to do: lawyers, accountants, and many third parties all at the table. This makes it prohibitively expensive for many distributed generation (DG) projects to raise tax financing.”

“For large utility-scale projects, this is not an issue, but for our customers (DG developers), it’s a big issue. That’s why we’re investing heavily in streamlining and digitising the entire process from end-to-end so that we can make this type of financing accessible to everyone who needs it.”

Richards nonetheless said the method is much easier than the previous requirement to form tax equity investment structures, and should increase the amount of capital available for clean energy in the US.

“We think transferability will unlock billions of net new capital for clean energy because it’s much easier for investors and buyers to buy credits now compared to how it was before the IRA,” he said.

Our publisher Solar Media is hosting the 10th Solar and Storage Finance USA conference, 7-8 November 2023 at the New Yorker Hotel, New York. Topics ranging from the Inflation Reduction Act to optimising asset revenues, the financing landscape in 2023 and much more will be discussed. See the official site for more details.

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PV Tech has been running PV ModuleTech Conferences since 2017. PV ModuleTech USA, on 16-17 June 2026, will be our fifth PV ModulelTech conference dedicated to the U.S. utility scale solar sector. The event will gather the key stakeholders from solar developers, solar asset owners and investors, PV manufacturing, policy-making and and all interested downstream channels and third-party entities. The goal is simple: to map out the PV module supply channels to the U.S. out to 2027 and beyond.

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